Eskom claims to have acted above board

Baldwin Ngubane, chairman, Eskom, at a media briefing at Eskom’s Megawatt Park said that Eskom acted above board, sent through applicable information to Thuli Madonsela, former public protector, but yet, her report did not reveal this information.

“Thula Mandonsela did not interview anyone at Eskom about the State of Capture Report,” said Dr Pat Naidoo, Eskom board member. He said that if she made an effort to interview anybody from Eskom, she would come to a total different conclusion.

Brian Molefe, group chairman of Eskom, reiterated in the briefing that the R600 million was paid to Tegeta, and that the coal was delivered. He was not able to state where the money went.

He presented some facts to the media, including the number of coal supplied, the dates and amounts of the contracts. He also said that there were various issues with a “gun to the head” attitude from the suppliers. The previous board awarded the procurement transactions with Tegeta and Brakfontein, and is in compliance with the PFMA.

“There were no conflict of interest with any of the transactations,” he said. “Eskom had to scavange coal during the load shedding period to ensure continuous energy supply,” said Dr Naidoo. He reiterated that Eskom had no influence of the Optimum Coal Mine transactions and has not been part of any decisions.

“The same goes to the Arnot Power Station coal supply agreement (CSA). At the time of expiry the SCA pricing was R 1 132/tonne. Exxarro offered to extend the contract at an average price of R737/tonne excluding capex and closure costs. Poor operational perfomance by Exxaro resulted in under delivery of non-contractual volumes.”

The expiry of the contract and poor quality forced Eskom to look at different suppliers, five were shortlisted and negotiations concluded.

Tegeta pre payment

Due to a short of supply of coal, only two suppliers, Tegeta and Umsimbithi, were able to increase volumes and meet the time and quality requirements.

Eskom also prepaid other suppliers an amount of R3.5 billion as at 31 March 2016. This helped Eskom to overcome the winter short supply and prevent load shedding in the winter. “Prepayments happens all the time,” said Dr Naidoo.

Prepayment for the different coal contracts

Significant value was obtained by Eskom, and hard decisions had to be taken by the board, which resulted in value for Eskom.

“All contracts were concluded in line with Eskom Procurement Policies and all transactions have a clear commercial rationale. It should be noted that Tegeta did not respond to the open RFP for supply to Arnot.

“Tegeta advised Eskom of its intention to reach a mutual agreement on specific terms to terminate all their contracts with Eskom namely Brakfontein Hendrina and Koornfontein,” said Dr Naidoo.

Conflict of Interest

“All directors of the board comply to the declaration of interest. Ms Cassim was never employed by Sahara Computers – a correction was sent to the former Public Protector, but this does not seem to have found its way into the report,” commented Dr Naidoo.

Conclusion

“All transactions complied with Eskoms’s Procurement Policies and Procedures are consistent with the requirements of the PFMA. We run a world class operation. External audit, internal audit and independent external legal firms have reviewed the contents of the presentation and have not identified any non-compliance of the part of the Eskom Board of Directors. The board acted in the best interest of Eskom,” he said.

“It is not clear how the former Public Protector came to the conclusion that the Board acted unethically and unlawfuly. It is so sad. Eskom has cooperated with the former Public Protector, but was not afforded a right to reply. About 160 boxes of information was sent to the former Public Protector. Eskom’s Board of Directors is considering to take the report fo the former Public Protector on review. The board does not believe any fruitless and wastefull expenditure has incurred as value has been demonstrated and it has exercised a duty of care,” concluded Dr Naidoo.